Industry Minister, Ian Macfarlane, kicks off debate on the future of local car industry and asks GM to push back on deadline.

Holden and Toyota to be given 'one last shot'

The federal government has committed to a “no nonsense” final stand to save the Australian car industry, but in the same breath acknowledged it cannot give manufacturers what they really need: a quick decision on long-term funding.

Industry minister Ian Macfarlane on Wednesday called on General Motors to delay a $1 billion co-investment in its Australian manufacturing operations while the Coalition awaits findings from an impending Productivity Commission review of the sector.

Flanked by Holden managing director Mike Devereux at a press conference in Adelaide, Macfarlane reaffirmed his intentions to save Holden and Toyota from exiting Australia, indicating the government would provide a short-term windfall to assist car makers through the next three years. Government assistance beyond 2016 still remains clouded, but Macfarlane said his intentions were to make the industry more independent and globally competitive.

“Time is running out … but the reality is we’re going to get this right, we’re going to give this everything and I’m going to ask GM in Detroit to be a little bit patient,” Macfarlane said.

Liberal government has entered talks with local manufacturers about future funding.

“I’ve got to have a productivity commission report before I hand down the final decision. I will try and do something in the short term just to keep everything going.

“The long term plan is to have an auto industry here for a long time.”

Before the election, the Coalition vowed to slash $500 million in car industry funding, casting grave doubt over whether manufacturers and the accompanying part supply chain would survive. Australian car makers have one of the lowest levels of government assistance compared with other manufacturers around the world.

Holden factory Photo: Joe Armao JAA

Holden has previously stated that it wants clarification on future policy settings before year’s end, to undertake important work at it’s Elizabeth manufacturing plant.

It is understood Holden is seeking long-term certainty so it can lock-down plans for the next-generation of cars it intends to manufacture in Australia beyond 2016 when the current Commodore and Cruze small car are due to be replaced.

“We need to have a relatively good amount of certainty that a policy is a policy,” Devereux told Fairfax Media in August.

“I do know that our current plan is to do some metal works in the body shop over the Christmas shutdown period, to prepare the body shop for the new models. That will require a few million dollars in investment and it would definitely be our preference to have that funding certainty before then.”

On Wednesday, Devereux dodged questions on whether the deadline could be moved or if General Motors executives were willing to wait until late next year, when the productivity commission report is likely to be handed down. Asked whether GM executives in Detroit had relaxed the deadline, Devereux replied: “the discussions with government begin today and those discussions are likely to be ongoing for some time”.

Macfarlane said the government would stand by its decision to cut funding from the industry, but was working towards making Holden and Toyota more internationally competitive and independent.

“I’m not looking back,” Macfarlane said.

“There was a lot of things said during the election campaign … I’ve drawn the line, I wasn’t the industry shadow minister. The policy’s there, I’m standing by it, it won’t break the car industry and I’m confident we can agree to terms of getting the industry through that tough spot and it won’t be $500 million but it will get them there.

“I’m not concerned with the next six months, I’m not concerned with the next three years – but yes it will be tough, it’s more between 2016 to 2020 (that I’m concerned).”

Macfarlane also left the door open to re-opening discussions with Ford on manufacturing, after the car maker announced in May it was abandoning it’s car making operations in Australia.

“My goal is to keep this one, to keep the plant in Melbourne where Toyota’s based; and I’d like to think that I can do something with Ford, I want to have another discussion with the Ford people,” he said.

“I’m going to Ford and Toyota next Wednesday and I’m going to see what we can do over there and I also want to see the component people.”